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Using Microfinancing To Help Alleviate US Poverty

With the income gap at its highest in many years, several organizations are looking at what worked for the developing world and applying it to the richest country on Earth.

What’s the Latest Development?

The popular microlending site Kiva, which enables individuals to loan as little as $25 to people in developing nations, has launched a new venture, Kiva Cities, that will do something similar for American owners of small businesses. They plan to partner with local groups and others to give the kinds of small loans (under $50,000) that most banks don’t bother handling. So far, they’ve established programs in five cities, including Detroit and Little Rock. According to Kiva executive Jason Riggs, “We help create the tipping point for young small companies so they can move up the financial access ladder.”

What’s the Big Idea?

The income gap between rich and poor has become so pronounced in the last few years that organizations that were pioneers in providing financial assistance to poor people in developing nations are now turning their focus to the US. Another microfinancing institution, Grameen Bank, got its start helping Bangladesh’s rural poor, and currently has 11 branch offices in several American cities under its Grameen America brand, with six more scheduled to open this year. Their loans, averaging about $1,500, are mostly being given to people with very little except “an idea, dream, and desire to help themselves,” says CEO Stephen Vogel. “The poor, no matter where they live, have the same issues if they live in Bangladesh or New York City.”

Photo Credit: Shutterstock.com

Read it at FastCompany/Co.Exist

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